Question 1

List the assertions and audit objectives the auditor considers while testing for presentation and disclosures.

Accepted Answer

Assertions and audit objectives consider

Question 2

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

Accepted Answer

A) sale of long-term debt or capital stock 
B) loss of a plant as a result of a flood 
C) major purchase of a business that is expected to double the sales volume 
D) settlement of litigation in excess of the recorded liability 
A) sale of long-term debt or capital stock 
B) loss of a plant as a result of a flood 
C) major purchase of a business that is expected to double the sales volume 
D) settlement of litigation in excess of the recorded liability

Question 3

Management furnishes the auditor with information concerning litigation,claims,and assessments.Which of the following is the auditor's primary means of initiating action to corroborate such information?

Accepted Answer

A) Request that the client's lawyers undertake a reconsideration of matters of litigation,claims,and assessments with which they were consulted during the period under examination. 
B) Request that the client's management send a letter of inquiry to those lawyers with whom management consulted concerning litigation,claims,and assessments. 
C) Request that the client's lawyers provide a legal opinion concerning the policies and procedures adopted by management to identify,evaluate,and account for litigation,claims,and assessments. 
D) Request that the client's management engage outside lawyers to suggest wording for the text of a footnote explaining the nature and probable outcome of existing litigation,claims,and assessments. 
A) Request that the client's lawyers undertake a reconsideration of matters of litigation,claims,and assessments with which they were consulted during the period under examination. 
B) Request that the client's management send a letter of inquiry to those lawyers with whom management consulted concerning litigation,claims,and assessments. 
C) Request that the client's lawyers provide a legal opinion concerning the policies and procedures adopted by management to identify,evaluate,and account for litigation,claims,and assessments. 
D) Request that the client's management engage outside lawyers to suggest wording for the text of a footnote explaining the nature and probable outcome of existing litigation,claims,and assessments.

Question 4

Which of the following scenarios regarding a lawsuit filed against a client by a third party would qualify as a "contingent liability"?

Accepted Answer

A) A lawsuit has been filed but not yet resolved. 
B) A lawsuit was filed and concluded with the client winning. 
C) A lawsuit was filed and concluded with a third party winning an award of $100 000,but the client hasn't paid yet. 
D) A lawsuit was filed and concluded with a third party winning an award of $100 000,which the client paid after the balance sheet date but before the statements were issued. 
A) A lawsuit has been filed but not yet resolved. 
B) A lawsuit was filed and concluded with the client winning. 
C) A lawsuit was filed and concluded with a third party winning an award of $100 000,but the client hasn't paid yet. 
D) A lawsuit was filed and concluded with a third party winning an award of $100 000,which the client paid after the balance sheet date but before the statements were issued.

Question 5

CAS 450 requires the auditor to communicate all misstatements to the audit committee

Accepted Answer

A) if the misstatements are slightly material. 
B) if the misstatements are material. 
C) if the misstatements are other than trivial. 
D) regardless of materiality. 
A) if the misstatements are slightly material. 
B) if the misstatements are material. 
C) if the misstatements are other than trivial. 
D) regardless of materiality.

Question 6

The initial review of the working papers prepared by any given auditor is normally done by the

Accepted Answer

A) partner assigned to the audit. 
B) supervisor or manager. 
C) senior. 
D) immediate supervisor. 
A) partner assigned to the audit. 
B) supervisor or manager. 
C) senior. 
D) immediate supervisor.

Question 7

You sent a legal letter to a lawyer who had invoiced your client.The lawyer replied that "his practice consists of conducting real estate closings,and so he could not respond to the letter." What impact does this have on the financial statement audit?

Accepted Answer

A) There is no impact upon the financial statement audit. 
B) The audit opinion will need to be qualified. 
C) The auditor will need to provide a denial of opinion. 
D) Additional information is needed by reference to legal invoices from this lawyer. 
A) There is no impact upon the financial statement audit. 
B) The audit opinion will need to be qualified. 
C) The auditor will need to provide a denial of opinion. 
D) Additional information is needed by reference to legal invoices from this lawyer.

Question 8

If a potential loss on a contingent liability is likely and the amount of the loss can be reasonably estimated,the liability should be

Accepted Answer

A) accrued and indicated in the body of the financial statements. 
B) disclosed in footnotes but not accrued. 
C) neither accrued nor disclosed in footnotes. 
D) disclosed in the auditor's report but not disclosed on the financial statements. 
A) accrued and indicated in the body of the financial statements. 
B) disclosed in footnotes but not accrued. 
C) neither accrued nor disclosed in footnotes. 
D) disclosed in the auditor's report but not disclosed on the financial statements.

Question 9

If a potential loss on a contingent liability is unlikely and the event will not likely have a significant adverse financial effect,the liability should be

Accepted Answer

A) accrued and indicated in the body of the financial statements. 
B) disclosed in footnotes but not accrued. 
C) neither accrued nor disclosed in footnotes. 
D) disclosed in the auditor's report but not disclosed on the financial statements. 
A) accrued and indicated in the body of the financial statements. 
B) disclosed in footnotes but not accrued. 
C) neither accrued nor disclosed in footnotes. 
D) disclosed in the auditor's report but not disclosed on the financial statements.

Question 10

The audit procedures for the subsequent events review can be divided into two categories: 1)procedures normally integrated as a part of the verification of year-end account balances,and 2)those performed specifically for the purpose of discovering subsequent events.Which of the following procedures would be in the first category?

Accepted Answer

A) Make inquiries of client regarding contingent liabilities. 
B) Obtain a letter of representation written by client. 
C) Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate. 
D) Review the minute book to determine the existence of any transaction related to year 1. 
A) Make inquiries of client regarding contingent liabilities. 
B) Obtain a letter of representation written by client. 
C) Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate. 
D) Review the minute book to determine the existence of any transaction related to year 1.

Question 11

The standard letter of confirmation sent to the client's legal counsel should be prepared on

Accepted Answer

A) the auditor's stationery and signed by an audit partner. 
B) the lawyer's stationery and signed by the lawyer. 
C) the client's stationery and signed by a company official. 
D) plain paper and be unsigned. 
A) the auditor's stationery and signed by an audit partner. 
B) the lawyer's stationery and signed by the lawyer. 
C) the client's stationery and signed by a company official. 
D) plain paper and be unsigned.

Question 12

At the completion of the audit,management is asked to make a written statement that it is not aware of any undisclosed contingent liabilities.This statement would appear in the

Accepted Answer

A) management letter. 
B) representation letter. 
C) engagement letter. 
D) letters testamentary. 
A) management letter. 
B) representation letter. 
C) engagement letter. 
D) letters testamentary.

Question 13

List the requirements outlined by the auditing standards relating to written representations from management.

Accepted Answer

Auditing standards require written repre

Question 14

The primary objective of analytical procedures used in the final review stage of an audit is to

Accepted Answer

A) obtain evidence from details tested to corroborate particular assertions. 
B) identify areas that represent specific risks relevant to the audit. 
C) assist the auditor in looking for potential material misstatements. 
D) satisfy doubts when questions arise about a client's ability to continue operations. 
A) obtain evidence from details tested to corroborate particular assertions. 
B) identify areas that represent specific risks relevant to the audit. 
C) assist the auditor in looking for potential material misstatements. 
D) satisfy doubts when questions arise about a client's ability to continue operations.

Question 15

Refusal by a client to prepare and sign the representation letter would require a(n)

Accepted Answer

A) qualified opinion as to scope limitation or a disclaimer of opinion. 
B) adverse opinion or a denial of opinion. 
C) qualified opinion as to accounting treatment departure or an adverse opinion. 
D) unqualified opinion with an explanatory paragraph. 
A) qualified opinion as to scope limitation or a disclaimer of opinion. 
B) adverse opinion or a denial of opinion. 
C) qualified opinion as to accounting treatment departure or an adverse opinion. 
D) unqualified opinion with an explanatory paragraph.

Question 16

The management letter

Accepted Answer

A) is required by CAS whenever there are "reportable conditions." 
B) must follow the format prescribed by the CPA. 
C) spells out to the audit committee the auditor's responsibilities under generally accepted auditing standards. 
D) is optional and is intended to help the client operate its business more effectively. 
A) is required by CAS whenever there are "reportable conditions." 
B) must follow the format prescribed by the CPA. 
C) spells out to the audit committee the auditor's responsibilities under generally accepted auditing standards. 
D) is optional and is intended to help the client operate its business more effectively.

Question 17

When several staff are working together on an audit engagement,what type of quality control review is conducted on a daily basis?

Accepted Answer

A) the partner reviews the electronic files 
B) team review by interview 
C) second partner review 
D) manager review of sections 
A) the partner reviews the electronic files 
B) team review by interview 
C) second partner review 
D) manager review of sections

Question 18

Which of the following substantive tests would the auditor conduct as a search for contingent liabilities?

Accepted Answer

A) select an attribute sample of legal expenses for matching to invoices 
B) select a dollar unit sample of legal expenses for matching to invoices 
C) inspect legal expense invoices and perform a census test of legal expenses 
D) review a sample of legal invoices,looking for appropriate authorization for payment 
A) select an attribute sample of legal expenses for matching to invoices 
B) select a dollar unit sample of legal expenses for matching to invoices 
C) inspect legal expense invoices and perform a census test of legal expenses 
D) review a sample of legal invoices,looking for appropriate authorization for payment

Question 19

Explain factual,judgmental,and projected misstatements.

Accepted Answer

1)Factual misstatements:
misstatements a

Question 20

If a lawyer refuses to provide the auditor with information that is within the lawyer's jurisdiction and may directly affect the fair presentation of financial statements about material existing lawsuits (asserted claims)or unasserted claims,the audit report would have to be

Accepted Answer

A) an adverse opinion. 
B) a qualified opinion. 
C) an unqualified opinion with an explanatory paragraph. 
D) modified to reflect the lack of available evidence (i.e. ,scope limitation). 
A) an adverse opinion. 
B) a qualified opinion. 
C) an unqualified opinion with an explanatory paragraph. 
D) modified to reflect the lack of available evidence (i.e. ,scope limitation).

List the assertions and audit objectives the auditor considers while testing for presentation and disclosures.

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

Management furnishes the auditor with information concerning litigation,claims,and assessments.Which of the following is the auditor's primary means of initiating action to corroborate such information?

Which of the following scenarios regarding a lawsuit filed against a client by a third party would qualify as a "contingent liability"?

CAS 450 requires the auditor to communicate all misstatements to the audit committee

The initial review of the working papers prepared by any given auditor is normally done by the

You sent a legal letter to a lawyer who had invoiced your client.The lawyer replied that "his practice consists of conducting real estate closings,and so he could not respond to the letter." What impact does this have on the financial statement audit?

If a potential loss on a contingent liability is likely and the amount of the loss can be reasonably estimated,the liability should be

If a potential loss on a contingent liability is unlikely and the event will not likely have a significant adverse financial effect,the liability should be

The standard letter of confirmation sent to the client's legal counsel should be prepared on

At the completion of the audit,management is asked to make a written statement that it is not aware of any undisclosed contingent liabilities.This statement would appear in the

List the requirements outlined by the auditing standards relating to written representations from management.

The primary objective of analytical procedures used in the final review stage of an audit is to

Refusal by a client to prepare and sign the representation letter would require a(n)

The management letter

When several staff are working together on an audit engagement,what type of quality control review is conducted on a daily basis?

Which of the following substantive tests would the auditor conduct as a search for contingent liabilities?

Explain factual,judgmental,and projected misstatements.

If a lawyer refuses to provide the auditor with information that is within the lawyer's jurisdiction and may directly affect the fair presentation of financial statements about material existing lawsuits (asserted claims)or unasserted claims,the audit report would have to be

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

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Exam 18: Completing the Audit

List the assertions and audit objectives the auditor considers while testing for presentation and disclosures.

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

Management furnishes the auditor with information concerning litigation,claims,and assessments.Which of the following is the auditor's primary means of initiating action to corroborate such information?

Which of the following scenarios regarding a lawsuit filed against a client by a third party would qualify as a "contingent liability"?

CAS 450 requires the auditor to communicate all misstatements to the audit committee

The initial review of the working papers prepared by any given auditor is normally done by the

You sent a legal letter to a lawyer who had invoiced your client.The lawyer replied that "his practice consists of conducting real estate closings,and so he could not respond to the letter." What impact does this have on the financial statement audit?

If a potential loss on a contingent liability is likely and the amount of the loss can be reasonably estimated,the liability should be

If a potential loss on a contingent liability is unlikely and the event will not likely have a significant adverse financial effect,the liability should be

The standard letter of confirmation sent to the client's legal counsel should be prepared on

At the completion of the audit,management is asked to make a written statement that it is not aware of any undisclosed contingent liabilities.This statement would appear in the

List the requirements outlined by the auditing standards relating to written representations from management.

The primary objective of analytical procedures used in the final review stage of an audit is to

Refusal by a client to prepare and sign the representation letter would require a(n)

The management letter

When several staff are working together on an audit engagement,what type of quality control review is conducted on a daily basis?

Which of the following substantive tests would the auditor conduct as a search for contingent liabilities?

Explain factual,judgmental,and projected misstatements.

If a lawyer refuses to provide the auditor with information that is within the lawyer's jurisdiction and may directly affect the fair presentation of financial statements about material existing lawsuits (asserted claims)or unasserted claims,the audit report would have to be

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

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